Inflation drops owing to low consumption amid pandemic

Bangladesh began FY21 with a drop in inflation and a researcher believes low consumption due to the coronavirus pandemic pushed the key indicator down.

Point-to-point general inflation fell to 5.53 per cent in July from 6.02 per cent in June. The rate was 5.62 per cent in July last year.

Latest data from the Bangladesh Bureau of Statistics showed a slump in food inflation – to 5.7 per cent in July from 6.54 per cent in June – contributed to the fall in general inflation.

Non-food inflation rose slightly to 5.28 per cent from 5.22 per cent, reports bdnews24.com.

The government failed to keep inflation below the target of 5.5 per cent in FY20 that ended on June 30. Average inflation was 5.65 per cent that financial year.

The government wants to keep inflation below 5.4 per cent this fiscal year.

“People are buying fewer goods because their income and purchase power have dropped due to COVID-19. A drop in trading might have caused the downward trend in inflation,” said Ahsan H Mansur, the executive director at Policy Research Institute.

Inflation was 5.43 per cent in the rural areas in July while 5.72 per cent in urban areas.